Read This Before You Consider Luxury Items As Investment

Most people buy expensive and exclusive items for status recognition. Some people, however, purchase luxury items as investment. 

The fact that they treat luxury items as investment seems unusual. Most would even consider it as an excuse to finally open their wallet and buy that luxury good they’ve been eyeing since the start of the year. They say it’s a wise decision to treat it as something with high returns in the future, other than the fact that...well, it’s a status symbol. 

Are they really good investments? 

There’s no one definition for a luxury item. However, Investopedia defined it as something that’s not really necessary to live but they are desirable items within a society or culture. They are products that only the people in the higher income brackets can afford because of their price tags. Luxury goods are meant not for convenience, but mainly to show off income and wealth.

Some would rather identify luxury items as something exceptional. Something that’s not easily available in the market. Otherwise, it does not belong to the luxury item category. Luxury brands can stop sellers and retailers from selling their goods on online marketplace, according to the European Court of Justice. This is done to maintain the image and prestige and exclusivity of the item - which is the essence of a luxurious product. 

If you are keen to buy and treat luxury items as investment, researching about the item should be the first thing to do. That’s because even expensive items can depreciate in value. What was once a status symbol, can become an ordinary thing as years go by. 

Here are the products that depreciate in value and should not be treated as investments:

1. Crystals

2. Furniture (sofa, elegant table, etc.) 

3. Fur 

4. Boats

5. Wedding dress

6. Jewelry

7. Private Jets

Jewelry is a debatable topic on whether or not it is still a good investment nowadays. According to Knight Frank Wealth Report, jewelry depreciate by 5% in 2018, making it the only luxury item that fell in value. 

People who still buy old and vintage cars to resell them at a higher price in the future. For them, they treat these luxury items as investments. Collectors who are avid fans of vintage cars are usually the rich and they are willing to spend a hefty sum on something that is so rare like an old car model back in the 90s. 

However, vintage cars are also a topic up for debate for luxury items investors. Many would argue that the costs of maintenance to keep it are high that the resell value is not enough to consider it as an investment with high returns.

Here are the luxury items that appreciate in value over time:

1. Artwork 

2. Wine

3. Designer Bags

4. Stamps 

5. Luxurious condo unit

If you think of luxury items as investments, then you can be both right and wrong depending on the item you are planning to buy. Some products will eventually lose its luster and appeal to the society, or its maintenance may not be enough for its future resale value. Luxury items are very good indicators of one’s wealth, success, and social class so for investors, it’s like hitting two birds with one stone. If you want to make the most of your future luxury item purchase, consider the drawbacks of the product and research its potential as a great investment.